Hold The Ramco Cements; target of Rs 780: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on The Ramco Cements with a target price of Rs 780 in its research report dated October 30, 2019.

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November 05, 2019 / 15:42 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on The Ramco Cements

The Ramco Cements (TRCL) reported Q2FY20 EBIDTA 3%/13 above our/consensus estimates. The marginal beat came largely on account of better than expected volume growth (10.5% v/s PLe:+8.5%). In line with our expectation, TRCL's margins fell sharply by 24% QoQ as the competition for volumes intensified in South region post July in wake of weak discipline, poor demand and high price levels. The upcoming new supplies of Chettinad cement, Penna and TRCL would keep region's prices under prolonged pressure. Sharp fall of ~20% in pet coke/thermal coal prices over last six months would help in costs lower by Rs100-120/t in H2FY20E.

Outlook

However, weakness in prices (due to intense competition) would more than dilute the tail wind on costs and hence, would keep margins under pressure in FY20E/FY21E. In light of expensive valuations and weaker margins, we maintain Hold with TP of Rs780 (earlier Rs750), EV/EBITDA of 14.5x FY21E.

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